A Few Questions for Ontario’s Auditor General on Renewable Energy Report

Toronto, ON — A new, independent review of the Ontario Auditor General’s recent chapter on renewable energy raises questions about many of the reported findings. After reviewing available facts, most of his conclusions do not appear to flow from the best available evidence—including, in one instance, facts from a fellow officer of the legislature.

The report, Renewable Energy Facts, released today by the energy consulting firm Bridgepoint Group, reviews the Auditor General’s December Annual Report that made several conclusions which, upon closer examination, are based on incomplete, inaccurate or missing facts.

“Auditor Generals’ reports form an important basis for public discussion. That discussion should be based on accurate facts and probing questions,” said Dr. Rick Smith, the Executive Director of Environmental Defence. “We commissioned an independent firm to double check what was being presented.”

“One thing is now clear. The Auditor General’s office needs to explain whether it just didn’t look for all the facts, or whether it looked and didn’t like what it found. Because the conclusions the Auditor General’s office came to are difficult to justify.”

Sweeping claims are made about Ontario’s renewable energy policies throughout the report, often without citation or reference. Among them, a claim that appears to be taken from a widely discredited Spanish study suggesting that using renewable energy will cost jobs because it costs more.

The Bridgepoint report reviews these claims and points out that recent reports suggest that while electricity prices are expected to rise in Ontario, renewable energy development is not the primary cause and that abandoning renewables would do little to change the trajectory.

“Ontario is challenged by the fact that it needs to update its electricity system, but any new form of electricity is going to be more expensive than what was built in the 1970s and ‘80s,” said Dr. Tim Weis, Director of Renewable Energy and Efficiency with the Pembina Institute. “There is no realistic scenario where prices are not going up. Ontarians need the facts to ensure informed decisions are made about investments in new power supply, yet it appears the Auditor General’s office did not even compare the cost of new clean energy with the cost of new polluting energy.”

The Bridgepoint Group’s report provides a review of some of the largest questions raised by the Auditor General report. Examples of discrepancies are listed below. The report can be downloaded here: http://www.bridgepointgroupltd.com/database/rte/files/Renewable%20Energy%20Facts.pdf

“These (renewable FIT) contracts are expected to lead to significantly higher electricity charges through the (global adjustment) GA portion of the electricity bill).” (Pg. 93)

The AG does not compare cost of renewables with that of conventional generation sources.

“Results from a Pembina Institute study show that electricity prices would continue to rise from 2011 to 2020, regardless of whether the new capacity is supplied by renewable or natural gas generation. Increased reliance on renewables via the FIT program results in marginally cheaper electricity prices for consumers over the next 20 years than installing new natural gas capacity (BG, P. 3).”

“Prices for renewable energy, especially under the FIT program, have been between two and 10 times higher than those of conventional energy sources, such as nuclear….” (Pg. 102)

The AG compares costs of new renewable generation with costs of nuclear facilities built several decades ago. An accurate comparison would be with current estimates of new and refurbished nuclear.

“Wind is already cheaper…than new and refurbished nuclear, currently estimated at a range of 12-20¢/kWh by Wall Street and independent analysts (BG, P. 3).”

“Based on our analysis of OPA data, renewable energy contracts will contribute significantly to increases to the Global Adjustment (GA). As illustrated in Figure 3, the GA is expected to increase tenfold province-wide, from about $700 million in 2006 to $8.1 billion in 2014, when the last coal-fired plants are phased out. Almost one third of this $8.1 billion is attributable to renewable energy contracts.” (Pg 94)

In April 2012, the OEB Market Surveillance Panel report showed that renewable energy only contributed 6% to the global adjustment from 2006 to 2011. For comparison, nuclear energy contracts contributed 45% during the same period.

The Ministry of Energy internally estimates the FIT program to currently contribute less than 2% to the GA in 2011, and less than 1% to the average household hydro bill in 2011.

Why did the AG focus only on the increase from renewable energy, but not the more than two thirds of the increase coming from nuclear and other sources?

“According to the study used by the Ministry and the OPA, 10,000 MW of electricity from wind would require an additional 47% of non-wind power, typically produced by natural-gas-fired generation plants, to ensure continuous supply.”(Pg 91)

The AG seems to imply that 47% of 10,000 MW or 4700 MW of additional non-wind backup power is required, which is a misinterpretation of the study’s results.

“If the Auditor General were referring to the GE report issued by the OPA and IESO, then the backup (power) required for 5-minute variability in a system with 10,000 MW of wind is 483.9 MW (BG, P. 4).” .

Out of the 483.9 MW of total backup power required, 329.1 MW is normally required without wind in the system. The remaining 155 MW or (47% more than the 329.1 MW) is the additional 47% of non-wind backup power required solely for 10,000 MW of wind (Paraphrased from BG, P. 31).

“We also noted that studies in other jurisdictions have shown that for each job created through renewable energy programs, about two to four jobs are often lost in other sectors of the economy because of higher electricity prices” (Pg 91)

There is considerable evidence of job creation in the European jurisdictions mentioned. After reviewing 18 reports and 6 methodologies, the International Energy Association recommends the approach of the EmployRes study that fully analyzes the macroeconomic effects of renewable energy deployment. This study “shows that when compared with a conventional energy scenario, increased share of renewable energy in Europe would bring more net jobs, GDP, investments and exports (BG, P. 4).”

These results were not mentioned in the AG report.

After stating, “renewable energy sources…cost much more than conventional energy,” without comparing new generation costs of both, the Auditor General included a graph on the actual and expected electricity price trends from 2006 onwards (p.94, Figure 2). This is graph shows steadily increasing prices, which the AG says will go continue: “renewable energy contracts will contribute significantly to increases [in price].” (Pg 94)

The graph used by the AG omits electricity prices from 2005. Yet, this data was on the public record, in a graph created by the Ontario Energy Board and published in a 2010 report from the Environmental Commissioner. Including this year’s data in the AG’s report would have made the apparently simple trend more complex. In fact, “prices in 2005 exceeded the highest prices from 2006 to 2010 (BG, P. 6)”, the years covered in the AG’s report.